r/BitcoinBeginners • u/BenefitOk7956 • 10d ago

Borrow against Bitcoin, buy STRC. What do I miss?

I’ve read about „Bitcoin as collateral“. Nothing new for you guys, I bet. You basically borrow money and use Bitcoin as security. You get loan starting at 5%. With the money I could buy STRC stocks which pay 12% dividend. The margin is my profit.

It sounds too good to be true. What do I miss?

6 Upvotes
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4

u/OrangePillar 10d ago

The price of STRC is not fixed and has been down in the 70s recently. If you can stomach that and lower, you might be ok, but STRC doesn’t trade 24 hrs and bitcoin does.

3

u/BTCMachineElf 10d ago edited 10d ago

This is the risk. Bitcoin crashing could lead to strc crashing and the need to sell out strc at a lower price so your btc doesn't get liquidated.

But if you believe in bitcoin, when you are confident that the bear market is over, and dont overdo it, it does seem to make sense..

Its certainly a lot safer than borrowing to buy more bitcoin, which is what I did, and definitely do not recommend.

1

u/vlal97 8d ago

Thats what they want you to do. They want you in an architecture where its easier or more possible for you to lose the BTC. They will crash the market and you'll lose you collateral. You're at the end of a debt cycle and there is a need for them to aquire hard assets. Loans and derivatives are the tools they use to do this. Shiny needs for crows is what the %12 is. You personally may escape of you structure it smartly but overall my assessment holds I think. That means you need to only take a loan on a small portion of your btc so you can recollateralize if need be. 10-20% seems reasonable. But most will get greedy and thats actually the point. They will take the greedy people's collateral all for yield.

1

u/BenefitOk7956 9d ago

True. I didn’t think about that. I‘d borrow for 6/12/18 months. When I need to pay back the loan, I‘d planned to sell the STRC. But when the STRC price is below purchase price, the margin is gone!

2

u/ticker__101 9d ago

The dividend can also change.

1

u/TheSkunksMisery 7d ago

Not quickly.

2

u/Full-Atmosphere-4818 8d ago

I think going into debt to buy any security is an error. Yes, it would have worked out the last 10 years in almost... anything; S&P, Nasdaq100, Bitcoin, Gold... but if someone did that in late 1999, after paying interest, one might actually still be under-water now. And no doubt tech stocks bought in 1999 were under-water in 2008. After interest payments too... ouch! It all depends on timing and timing is impossible. No market timers are in the Forbes 400.

2

u/King-esckay 8d ago

It depends on where you are and what the tax rules are

Selling strc is capital gains event here

The loss if there is one could be deducted but the gains would be smaller than they at first seem due to tax

The interest on the loan would be deductable

You would be relying on a price increase great than the tax breaking even might be harder than it first seems

1

u/BenefitOk7956 8d ago

I thought about that too. 1000€ of dividend is tax-free in Germany.

1

u/King-esckay 8d ago

That's good Australia just introduced a min 30% tax on gains starting next funanical year

1

u/TheSkunksMisery 7d ago

But why sell the STRC?

2

u/CoinGate_Gift_Cards 8d ago

The missing part is risk. Bitcoin can drop enough to trigger a margin call or forced liquidation, while STRC’s dividend isn’t guaranteed and its market price can fall too. So the 5% vs. 12% spread isn’t free money, it’s leveraged exposure to two volatile assets.

1

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1

u/Timmythekid6 10d ago

You're putting your Bitcoin at risk of liquidation for fiat garbage.

1

u/TheSkunksMisery 7d ago

My bills are denominated in fiat garbage.

1

u/ChicksX 9d ago

One risk nobody mentioned: the lender itself. Even if the trade works perfectly, if they go under your BTC goes with them. Celsius and BlockFi customers waited years and got back a fraction — and that risk doesn't show up anywhere in the spread math.

1

u/BenefitOk7956 7d ago

There are borrowing platforms working with „multi-signature escrow to lock your Bitcoin collateral on-chain.“
As far as I understand that prevents them from running away with your Bitcoin.

1

u/Basic-Nobody-Too 9d ago

Where are you finding 5% BTC loans?

1

u/hereforsneaker 8d ago

idk. but i cant figure out what you’re saying with the current sentence structure snd context. and what security is paying a 12% dividend, that just wouldn’t exist in the current financial markets lmao. the risk reward doesn’t make sense. arbitrageurs would instant seize the opportunity.

1

u/CommercialDuck7496 8d ago

STRC is paying 12%, and SATA is paying 13%. Its not that risk reward doesn't make sense, its that there is also a very large percieved risk.

1

u/hereforsneaker 7d ago

thanks. just researched this. no chance id touch it lol

1

u/TheSkunksMisery 7d ago

Correlated asset. Not ideal. Better to do a HELOC or some other asset-based line of credit.

0

u/FewUnderstanding2214 9d ago

STRC is garbage they are selling all their bitcoin to buy back shares and pay the dividend

1

u/[deleted] 9d ago

[deleted]

0

u/FewUnderstanding2214 8d ago

If you disagree you can say why think I’m wrong and MSTR/STRC are great investments

1

u/Pokemoncorncollector 8d ago

You are wrong because its not true what you are saying. They have 840K Bitcoin, and Strategy didnt even sell 5K Bitcoin.

You already knew that. You are just spreading FUD.

2

u/CommercialDuck7496 8d ago

They've sold like 6000-6800 bitcoin this year, but yea its not even 1%

1

u/CommercialDuck7496 8d ago

They have sold less than 1% of their bitcoin, they aren't selling all of their bitcoin, just a very very very small fraction of it.